business
technology

The Race for AI Supremacy: U.S. vs. China

Economics, Oxford University
Big Data and Analytics, Babson
Genesis
Response
Penultimate
Finale

Thomas H. Davenport

Big Data and Analytics, Babson

August 24th, 2020
I agree that predictions of national advantage don't always come to pass (Ezra Vogel was a teacher of mine). Also that we need breakthroughs in data efficiency if AI is to succeed in the long run. China does have a lot of data, at least where consumer use of mobile phones, Internet-based services, and facial images are concerned. Right now that's only a small advantage, and it may become smaller with technical breakthroughs. But there are several other attributes of AI advantage that make China a formidable contender to the U.S. or any other nation.
A key one is government funding. The U.S. federal government has issued unfunded executive mandates that agencies should pursue AI, and the military and intelligence agencies are spending only about $2B on AI.
China, on the other hand, announced a multi-billion dollar initiative in 2017 to become the world leader in AI by 2030. The fifth largest Chinese city, Tianjin, has announced plans to spend $15B advancing AI in government and business areas. The Chinese government’s venture capital fund has over $30B to invest in AI and related technologies. Beijing has committed $2B to the development of an AI park in the city. This spending clearly comprises the largest monetary commitment to AI in the world from a country's governmental bodies.
The federal program also addresses the role of AI in China’s defense and intelligence industries, and AI use for social and political control. There are close ties between private and public sector innovations in China, and four large AI-oriented firms there (Baidu, Tencent, Alibaba, and iFlytek) are developing government-backed open innovation platforms in particular domains of AI.
On venture capital, U.S. startups received $9.3 billion in venture funding in 2018, a record amount. However, one report suggests that Chinese venture investments—many of which involved AI—were higher than in the U.S. for the first half of 2018. Data from 2017 suggests that Chinese AI firms received more venture funding than U.S. AI firms did. There are still, according to one analysis, many more AI firms in the U.S. than in China, but the historical advantage of the U.S. over China in venture funding can no longer be assumed.
Talent is also an important factor in AI competitiveness. The U.S. had an historical edge in this regard—and a recent analysis by LinkedIn data suggests that the U.S. has far more AI engineers than China. But China is closing the gap rapidly, with a variety of education programs beginning at elementary school. Examine the agenda of any major AI conference in the world, and you will see many more Chinese-sounding names (some living in the U.S.) than American-sounding ones.
The U.S. may have the edge over China in AI capabilities today, but I would bet on China over time. The country has a strategy for AI, and the U.S. is still wrestling with one. It also has a determined government, an inexhaustible pot of money, a growing cadre of smart researchers, and a large, digital-hungry population.
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